Slovenia’s minimum wage to rise significantly

The statutory minimum wage in Slovenia will rise by 16% this year to €1,482 gross (€1,000 net) a month in response to rising costs of living.

The increase has been welcomed by trade unions and decried as damaging by business, CE Report quotes The Slovenia Times.

The take-home pay will depend on individual circumstances such as the number of dependants and tax breaks, but will amount to €1,000 for a single person without children, Labour Minister Luka Mesec announced on 22 January.

For comparison purposes, the average net wage last November, the most recent month for which complete data is available, was at €1,627.

The new minimum wage figure is based on periodic minimum cost-of-living calculations. The results showed an 18% cost-of-living increase over the last three years, to €791. According to law, the minimum wage must range between 120% and 140% of the minimum cost of living.

"I believe the consequences will be mostly positive, because the increase is realistic if ambitious," Mesec said.

In December, when he first announced the plan to propose the new figure, he argued that life in Slovenia was becoming increasingly unaffordable, placing numerous households, including those with low-income earners, in a difficult position.

The law determines that the labour minister has sole discretion to set the minimum wage, so this is not a decision for the government as a whole to take.

Concerns voiced over potential ramifications

The decision comes after a month of heated debates between corporate leaders and trade unionists, during which Mesec has stuck with the original proposal.

Responding to concerns by business, Mesec said the total cost to employers will increase by 11% to €1,735 because contributions are levied not on the entire minimum wage but on 60% of the average wage.

"This is good news for business," the co-leader of the junior coalition Left party said, confident that the increase is "moderate enough so that it will not have negative economic consequences".

Business representatives and employers described the increase as a "dangerous pre-election move" and a "nail into the coffin of the economy", warning about ramifications such as job losses, declining competitiveness and rising inflation.

When asked last month if the proposal was an electioneering tactic, Mesec dismissed the notion, noting that the recalculation was agreed upon earlier and aligns with long-standing party policy.

PM proud of minimum wage rising above poverty threshold

Prime Minister Robert Golob shrugged off the concerns voiced by business representatives, saying that the economy was doing great and that every time employers had to share part of the profit with employees, they used the rhetoric about the world coming to an end.

He is proud that the minimum wage will now exceed the poverty threshold for the first time ever, and would like to see a system where it would never again drop below this level.

Holiday allowance and Christmas bonus to rise as well

Mesec's decision will also lead to higher holiday allowance and Christmas bonus, which are both mandatory and expressed as percentages of the minimum wage: the holiday allowance will amount to €1,482 and the Christmas bonus to €741.

There have also been concerns about wage compression, the notion that the gap between the lowest and the highest wages will be too narrow, but the minister has dismissed that, arguing that compression is temporary.

As for the impact on public finances given that some public sector employees are on minimum wage, Finance Minister Klemen Boštjančič said that all budget users had been instructed to work within existing budgets.

"There is no way the Finance Ministry would consider a budget revision of anything like that."

Possible ripple effect on public sector wages

The broader impact on public sector wages remains unclear for now. When the system was reformed in 2024, the basic premise was that there should be no pay brackets with a base wage below minimum wage, but now the lowest six brackets fall under this level.

Some pundits have warned in recent weeks that the minimum wage hike would disrupt the painfully structured public sector pay system and might lead to powerful unions wanting to extract even higher wages.

Photo: dpa/STA